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[freepik](https://www.freepik.com/free-photo/cardano-blockchain-platform-collage_69607454.htm#query=Crypto%20Trading&position=4&from_view=search&track=ais)|
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Hello friends, good to have you back here once. I just couldn't keep up with blogging last week as it was a very engaging period for me. I had so much on my table to take care of offline but am glad am back once again. So...who missed me? Smiles.
I trust you got so much value from our last discussion. Today we would yet discuss another interesting topic I've titled **Futures Trading** Am sure we are not unfamiliar with this subject but if in case you're new to it, you would surely be enlightened if you follow through. I promise to make it as simple as possible. Let's get into it.
|**Introduction**|
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Cryptocurrency has evolved so much that making profit from it have now been simplified and diversified. There are more than one method of making profit with Crypto. Gone are the days when you have to buy and hold assets for long before you could enjoy a substantial proceed from your investment.
Well this is still being practiced today but then there are more viable way to earn without waiting for so long and one of the ways is the Futures kind of Trading. Futures Trading have been around for quite sometime now and the good thing about it is that it has made many rich and financially stable even within a very short period of time.
But I think it's also expedient that I mention that this same futures Trading has made many bankrupt. In other words, it's a two-edged sword, you have to mind how you wield it. So what is future trading? Let's answer the question.
|**What is future Trading?**|
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Future trading is a type of trading that can be likened to a contractual agreement to buy or sell an asset at a particular price and at a specific time in the future. In other words, it's not a kind of trade that is implemented immediately, it's futuristic.
More like some kind of prediction about what is likely to be the value of an asset in the near future. Once your prediction goes right, you can be sure of profit, but if reverse is the case, you would have to suffer loss. The fact is one wins while the other lose.
|[freepik](https://www.freepik.com/free-photo/portrait-successful-south-asian-employee-formal-wear-looking-camera-during-business-smartphone-conversation-confident-corporate-boss-have-cellphone-consultancy-call-during-laptop-work_9314199.htm#query=Crypto%20Trader&position=0&from_view=search&track=ais)|
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Let's take for instance. Investor A believe that the price of steem would rise at an agreed date in the near future, he then takes an action/position which is referred to as **Long**. Investor B believes that the price of the same steem would fall in price by the agreed date, for that reason, he takes action/position referred to as **Short** position.
These are technical terms used in future trading. To further simplify these terms, I would say, to short means to sell while to long means to buy. So what investor A will do is to buy the asset ahead of his upward rise in price prediction. When it then play out as plan, he would be in profit as he would be selling that same asset in massive profit.
Investor B who believes that asset would fall or decline in price does the opposite by selling the asset ahead of his future prediction hoping to buy the asset at a more cheaper rate in the agreed future date, if all things go well, he would be in profit by then as well.
I also need to mention at this junction that you do not buy an asset for the purpose of holding it when dealing with future trading. Futures is quite different from spot trading. Maybe we would have time to explore these differences much more later.
|**How future trading works on Exchange**|
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Exchanges are common platform where investors trade futures and what the exchange does is to match investors, that is buyers and sellers of each future contract since it's a game of prediction. What happens is that one will lose for the other to win the trade therefore it's a zero sum game
|**Key components of Futures Trade**|
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There are key components that validates and makes future contract measurable and these include the following below.
• **Expiration Date**:This is the date the future contract will be terminated or expires. Every contract has an expiry date to make it more measurable and valid. This is the very date agreed upon by the future trader when the contract was initiated. Although today we have what we call the **Perpetual** feature of future trading.
This keeps the future contract running indefinitely, I mean continuously without end, expiration date. This is done by most exchanges and it seem to be the order of the day on those exchanges as investors take advantage of it.
|[freepik](https://www.freepik.com/free-photo/collage-finance-banner-concept_51400812.htm#query=Crypto%20trading&position=3&from_view=search&track=ais)|
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• **Contract Lot size**: The contract size talks about the specific amount of asset to be delivered to the winner. For example 1 BTC or $1 worth of BTC. If you're dealing with commodities like crude oil, you could go like... 1 barrel of Crude oil since crude oil is sold in barrels
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• **Settlement**: This is very important. The mode of settling whoever wins the trade is important and it varies from platform to platform. The use of cash or cash equivalent is allowed in place of an asset traded by some platform while some other platform would only allow you to settle using the asset traded.
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• **Leverage**
Future trader love to use leverage to amplify their profit. The leverage feature is available on future trading interface. It's represented with things like 10×, 20× , 50× and so on depending on the trading platform.
How this works is simple, a trader who want to long or short with $10,000 dollar but do not have it, maybe he has just $1000, now with just a thousand dollar, he could use the 10× leverage feature of the platform to get his $10,000 for his desired trade.
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|**Conclusion**|
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There you go friends.I would love to wrap it up at this juncture. I want to believe you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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